LEGISLATIVE, FINANCE AND ADMINISTRATION COMMITTEE
The Legislative, Finance, and Administration Committee meeting was held on March 12, 2007, at 5:35 p.m. with Acting Chairman Slavin presiding. Members present were Mr. Hogan, Mr. Salters, Mr. Shevock, and Mrs. Jones. Members of Council present were Mr. Carey, Mrs. Russell (arrived at 5:10 p.m.), Mr. McGiffin, Mr. Ruane, and Council President Williams. Mayor Speed was also present.
AGENDA ADDITIONS/DELETIONS
Mr. Hogan moved for approval of the agenda, seconded by Mr. Shevock and unanimously carried.
Comprehensive Annual Financial Report (CAFR) for Fiscal Year Ended June 30, 2006
In accordance with Section 46 of the City Charter, the City's financial books are audited by independent auditors each year. The Treasurer/Finance Director, Mrs. Mitchell, submitted the Comprehensive Annual Financial Report (CAFR) for Fiscal Year Ended June 30, 2006. It was noted that all financial transactions were audited by the selected C.P.A. firm of Faw Casson & Company, whose opinion has been included in the report. The City has received the Award of Excellence in Financial Reporting from the Governmental Finance Officers Association of the United States and Canada (GFOA) for the last 21 years. Mrs. Mitchell gave a Power Point Presentation which highlighted the key points of this year’s CAFR.
Staff recommended acceptance of the Comprehensive Annual Financial Report (CAFR) for Fiscal Year Ended June 30, 2006.
Mrs. Jones moved to recommend approval of staff’s recommendation, seconded by Mr. Hogan and unanimously carried.
Audit Services - Request for Proposals
Mrs. Mitchell, Treasurer/Finance Director, submitted a Request for Proposals for Professional Auditing Services for the committee’s review. She reminded members that in response to a previous request of the City’s Auditor, it was decided that the Legislative, Finance, and Administration Committee would function as the City’s Audit Committee. One of the functions is to review the request for proposals for professional auditing services prior to it being let.
Mayor Speed referenced an e-mail, dated March 11, 2007, he sent to Mrs. Mitchell containing typographical corrections, as well as other comments/questions (Attachment #1) and questioned, since staff is not able to suggest a definition for “significant” and “major” as noted in Paragraph IIC, if the final selected auditors should be required to provide these definitions. Mrs. Mitchell agreed with the Mayor and indicated that once the auditor is selected, the request would be made of them to include the definitions in their proposal.
Mr. Salters moved to recommend acceptance of the Request for Proposals for Audit Services (Attachment #2), seconded by Mr. Shevock and unanimously carried.
Strategic Evaluation and Work Plan - Tax Assessor’s Office
Members reviewed a report submitted by Mr. DePrima, City Manager, and Mr. Capuano, Tax Assessor, on an evaluation of the status of the Tax Assessment Office. Mr. DePrima advised members that after Mr. Capuano was hired in the spring of 2006, they inventoried all of the issues involving the Tax Assessment Office. He stated that the report provided contains a strategic evaluation, recommended solutions to the issues, a status of where implementation of corrective action has already started, and a work plan for the years 2007 through 2011. The goal of the report is to identify how the Assessment Office can become a model operation that uses modern practices to keep our assessment rolls, appeal processes, and transfer tax collections as effective and as fair as possible, while providing excellent customer service. The report includes four (4) sections, as follows: 1) Resources, which covers staff, training, and systems evaluations; 2) Planning, which focuses on the reassessment and revaluation requirements needed in the future; 3) Operations, which identifies improvements needed in current day-to-day practices and serves as a complete inventory of all of the functions of the office; and 4) Communication, which provides some ideas for improving relationships with customers.
Mr. DePrima stated that the big challenge will be for the City to determine how to move forward with revaluations/reassessments. He explained the difference between revaluation of properties, which reviews values, sales data, etc. and a reassessment, which reviews individual properties. He stated that the current Dover Code requires the services of an independent assessment company in 2007/2008, with an estimated cost of over $400,000, and again in 2010/2011, estimated at a cost of $1M. As an alternative, Mr. DePrima stated that the City could increase assessment office staff and do both the revaluation and reassessment in four-year increments ending in FY2010/2011 to be used in the June 2011 billing. He advised members that the City Assessor is conducting a pilot study on 2,800 properties located on the west side of Dover to determine which of these two (2) methods would be best for the City.
Mr. Ruane relayed concern that the three (3) year deadline for the reassessment, as required in the City Charter, will not be met. Concurring, Mr. Capuano suggested that an evaluation (equity) of the community be accomplished and from that, it can be determined what resources would be required to have it accomplished. He explained that it is difficult to make a recommendation regarding an old system which cannot be met with the prior or existing staff and noted that hiring a company would cost approximately $1M to meet the Charter deadline. He felt that an alternative plan should be considered and that additional information could be provided to members within a month.
Mr. DePrima explained that the City Charter requires an assessment every three (3) years, the Dover Code establishes the requirement for the independent reassessment and staff’s valuation and assessment, and sets forth the 2010 deadline.
In response to Mr. Ruane, Mr. Capuano suggested that before a Charter amendment is requested, there be a plan developed. At the request of Acting Chairman Slavin, Mr. Capuano was requested to provide an update on the plan during the second committee meeting in April. Mr. Ruane suggested that the plan include consideration of delinquent taxpayers and the provisions that were previously adopted by Council.
Mayor Speed requested that the plan include the long-term costs for salaries, benefits, etc. for hiring additional staff personnel for the Tax Assessment Office.
Mr. Salters moved to recommend acceptance of the Strategic Evaluation and Work Plan 2007-2011 Report as presented by staff, seconded by Mr. Shevock and unanimously carried.
State of the City Budget - Mid-Year Review
Mr. DePrima, City Manager, presented members with the mid-year review of the Fiscal Year 2007 City of Dover Budget. The purpose of this report is to give City Council a mid-year picture of the City’s operating expenses and revenues for all City budgets. This should be considered a proactive exercise so that Council can take necessary actions to adjust budgetary behavior if necessary.
Mr. DePrima stated that, overall, the report projects that the General Fund Budget Balance will increase by $217,169 to $2,909,867. The combined Water/Wastewater Fund Budget is projected to decrease by $1,015,818 to $4,077,224. The Electric Fund has no significant changes. He reported that “managing to the budget” continues to be successful and that the City Manager and the Finance Director continue to monitor budgets closely.
Prior to reviewing with members the most notable revisions, Mrs. Tieman, Senior City Administrator, advised members of a correction to page 2 of the report (2nd bullet), explaining that the Recreation Grants were handled during the January 22, 2007 Budget Revision Ordinances; therefore, rather than the amount of $104,162, it should reflect $25,000.
Responding to Mr. Ruane, Mrs. Tieman confirmed that, of the $66,473 increase in the City Manager’s budget, $49,303 is specifically for the legal expenses for an employee arbitration case. Mr. DePrima stated that the legal fees associated with the 1146 Rule are being paid for through existing resources. For informational purposes, Mr. Ruane requested that staff provide a breakdown of the legal expenses for the City Manager.
With regards to the administrative organization of the Public Utilities Department, Mr. Ruane reminded members that when originally presented to Council, there was a savings to be anticipated. He requested that staff provide the final organization and its financial results. Responding, Mr. DePrima assured members that the requested information would be made a part of the City’s Annual Budget.
Staff recommended approval of the mid-year review. If the committee recommends approval, budget ordinance amendments will be developed and presented to City Council for a First Reading to be accomplished during their Regular Meeting of March 26, 2007.
Mr. Salters moved to recommend approval of the Mid-Year Budget Review for Fiscal Year 2007, as presented by staff (Attachment #3 - Budget Ordinance Amendments). The motion was seconded by Mr. Shevock and unanimously carried. (City Clerk’s Office Note: Resulting from the committee’s recommendation, the attached Budget Ordinance Amendments will be presented to City Council for a First Reading on March 26, 2007).
FY2008 Revenue Forecasting
As directed during the Special Council Meeting of May 10, 2006, the City Manager submitted the projected revenues, reserve fund balances, and excess carry forward balances for the coming year for the committee’s review.
Mrs. Tieman, Senior City Administrator, reviewed the Budget/Reserve Fund Balances as of the Mid-year Review (March 12, 2007) as well as the Revenue Forecast for FY2008.
Mr. Hogan relayed that his only concern with the Revenue Forecast for FY2008 is with the transfer from the Electric Fund. It was his opinion that it is too high, explaining that it is difficult to justify a $1.8M transfer and then having to discuss a possible increase in electric rates. Mr. DePrima stated that the transfer was reduced from 8% to 6.5% and reminded members that all the revenue modeling has been based on this percentage.
Concurring, Mr. Ruane also felt that the transfer from the Electric Fund is too high and unrealistic, and questioned if the modeling takes into account the short-fall in terms of the cost of the plant versus what the plant is earning. Responding, Mr. DePrima stated that the percentage has taken into account all plant costs and that the most recent model, which members of Council agreed to, is what the 6.5% is based on.
Mr. Ruane noted that no new revenues were included in the forecast and suggested that staff review the 2003 Revenue Manual to determine if items such as a water impact fee would be reasonable and that it be included when the committee’s report is presented to Council for consideration.
Mr. Salters moved to recommend acceptance of the Revenue Forecast for FY2008, with the comments noted by members (Attachment #4), seconded by Mr. Hogan and unanimously carried.
Mr. Hogan moved for adjournment, seconded by Mr. Salters and unanimously carried.
Meeting Adjourned at 6:00 P.M.
Respectfully submitted,
Timothy A. Slavin
Acting Chairman
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Attachments
Attachment #1 - E-Mail from Mayor Speed Dated March 11, 2007
Attachment #2 - Request for Proposals for Audit Services
Attachment #3 - Proposed Budget Ordinances
Attachment #4 - Revenue Forecast for FY2008